Publications CV
Demographic Transitions
across Time and Space (with
Matthew J. Delventhal and Jesus Fernandez-Villaverde)
The demographic transition, i.e., the move from a
regime of high fertility/high mortality into a regime of low fertility/low
mortality, is a process that almost every country on Earth has undergone or is
undergoing. Are all demographic transitions equal? Have they changed in speed
and shape over time? And, how do they relate to economic development? To answer
these questions, we put together a data set of birth and death rates for 186
countries that spans more than 250 years. Then, we use a novel econometric
method to identify start and end dates for transitions in birth and death
rates. We find, first, that the average speed of transitions has increased
steadily over time. Second, we document that income per capita at the start of
these transitions is more or less constant over time. Third, we uncover
evidence of demographic contagion: the entry of a country into the demographic
transition is strongly associated with its neighbors having already entered
into the transition, even after controlling for other observables. Next, we
build a model of demographic transitions that can account for these facts. The
model economy is populated by different locations. In each location, parents
decide how many children to have and how much to invest in their human capital.
There is skill-biased technological change that diffuses slowly from the
frontier country, Britain, to the rest of the world.
Child-Related Transfers, Household
Labor Supply and Welfare (with
Remzi Kaygusuz and Gustavo
Ventura), Review of Economic Studies 87(5):
2290–2321
What
are the macroeconomic effects of transfers to households with children? How do
alternative policies fare in welfare terms? We answer these questions in an
equilibrium life-cycle model with household labor supply decisions, skill
losses of females associated to non participation,
and heterogeneity in terms of fertility, childcare expenditures and access to
informal care. Calibrating our model to the U.S. economy, we first provide a
roadmap for policy evaluation by contrasting transfers that are conditional on
market work (childcare subsidies and childcare credits) with those that are not
(child credits), when both types can be means tested or universal. We then
evaluate expansions of current arrangements for the U.S., and find that
expansions of conditional transfers have substantial positive effects on female
labor supply, that are largest at the bottom of the skill distribution.
Expanding childcare credits leads to long-run increases in the participation of
married females of 10.6%, while an equivalent expansion of child credits leads
to the opposite (-2.4%). Expanding existing programs generates substantial
welfare gains for newborn households, which are largest for less-skilled
households. Expanding childcare credits leads to the largest welfare gains for
newborns and achieves majority support.
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article Link to the published version
Reforming the Individual Income Tax in Spain (with Javier Lopez-Segovia and
Roberto Ramos), SERIEs (The Journal of
Spanish Economic Association), forthcoming
Can the Spanish government generate more tax
revenue by making personal income taxes more progressive? To answer this
question, we build a life-cycle economy with uninsurable labor productivity
risk and endogenous labor supply. Individuals face progressive taxes on labor
and capital incomes and proportional taxes that capture social security,
corporate income, and consumption taxes. Our answer is yes, but not much. A
reform that increases labor income taxes for individuals who earn more than the
mean labor income and reduces taxes for those who earn less than the mean labor
income generates small additional revenue. The revenue from labor income taxes
is maximized at an effective marginal tax rate of 51.6% (38.9%) for the richest
1% (5%) of individuals, versus 46.3% (34.7%) in the benchmark economy. The
increase in revenue from labor income taxes is only 0.82%, while the total tax
revenue declines by 1.55%. The higher progressivity is associated with lower
aggregate labor supply and capital. As a result, the government collects higher
taxes from a smaller economy. The total tax revenue is higher if marginal taxes
are raised only for the top earners. The increase, however, must be substantial
and cover a large segment of top earners. The rise in tax collection from a 3
percentage points increase on the top 1% is just
0.09%. A 10 percentage points increase on the top 10%
of earners (those who earn more than €41,699) raises
total tax revenue by 2.81%.
Labor Market Institutions and Fertility (with Ezgi
Kaya and Virginia Sánchez Marcos), new
version
The total fertility rates differ substantially
across high-income countries. In some countries, the total fertility rate is as
low as 1.3, and factors behind such low levels are not well understood. In this
paper, we show that uncertainty created by dual labor markets (the coexistence
of jobs with temporary and open-ended contracts) and inflexibility of work
schedules are responsible for low fertility for college-educated women. Using
rich administrative data from the Spanish Social Security records, we document
that temporary contracts are associated with a lower probability of first
birth. With Time Use data, we also show that women with children are less
likely to work in jobs with split-shift schedules, which come with a fixed time
cost. We then build a life-cycle model in which married women decide whether to
work or not, how many children to have, and when to have them. Split-shift
schedules present a concrete example of inflexible work arrangements and fixed
time cost of work for women. Reforms that reduce the duality of labor market
and eliminate split-shift schedules increase the completed fertility of
college-educated from 1.52 to 1.88. In the model, women face a trade-off
between having children early and waiting and building their careers and these
reforms allow them to have more children earlier in their careers. They also
increase the labor force participation of women and eliminate the employment
gap between mothers and non-mothers.
This
paper was previously titled “Labor Market Frictions and Lowest Low Fertility”
Does the Added Worker Effect Matter? (with Yuliya Kulikova
and Arnau Valladares-Esteban
)
The
added worker effect (AWE) measures the entry of individuals into the labor
force due to their partners' job loss. We propose a new method to calculate the
AWE, which allows us to estimate its effect on any labor market outcome. We
show that without the AWE reduces the fraction of households with two
non-employed members. The AWE also accounts for why women’s employment is less
cyclical and symmetric compared to men.
In recessions, while some women lose their employment, others enter the
labor market and find jobs. This keeps the female employment relatively stable.
The Wife's Protector: A Quantitative
Theory Linking Contraceptive Technology with the Decline in Marriage (with Jeremy Greenwood and Karen Kopecky), NEW, Prepared for the Handbook of Historical
Economics, edited by Alberto Bison and Federico Giovanni, (Academic Press).
The 19th and 20th centuries saw a transformation
in contraceptive technologies and their take up. This led to a sexual
revolution, which witnessed a rise in premarital sex and out-of-wedlock births,
and a decline in marriage. The impact of contraception on married and single
life is analyzed here both theoretically and quantitatively. The analysis is
conducted using a model where people search for partners. Upon finding one,
they can choose between abstinence, marriage, and a premarital sexual
relationship. The model is confronted with some stylized facts about premarital
sex and marriage over the course of the 20th century. Some economic history is
also presented.
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Is Marriage for White People?
Incarceration, Unemployment, and the Racial Marriage Divide (Elizabeth Caucutt
and Christopher Rauh)
The black-white differences in marriages in the US are striking.
While 83% of white women between ages 25 and 54 were ever married in 2006, only
56% of black women were: a gap of 27 percentage points. Wilson (1987) suggests
that the lack of marriageable black men due to incarceration and unemployment
is responsible for low marriage rates among the black population. In this
paper, we take a dynamic look at the Wilson Hypothesis. We argue that the
current incarceration policies and labor market prospects make black men
riskier spouses than white men. They are not only more likely to be, but also
to become, unemployed or incarcerated than their white counterparts. We develop
an equilibrium search model of marriage, divorce and labor supply that takes
into account the transitions between employment, unemployment and prison for
individuals by race, education, and gender. We estimate model parameters to be
consistent with key statistics of the US economy. We then investigate how much
of the racial divide in marriage is due to differences in the riskiness of
potential spouses. We find that differences in incarceration and employment
dynamics between black and white men can account for half of the existing
black-white marriage gap in the data.
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article
Optimal Spatial Taxation: Are
Big Cities Too Small? (with Jan Eeckhout)
Read Barcelona GSE Focus feature
on this article
We
analyze the role of optimal income taxation across different local labor
markets. Should labor in large cities be taxed differently than in small
cities? We find that a planner who needs to raise a given level of revenue and
is constrained by free mobility of labor across cities does not choose equal
taxes for cities of different sizes. The optimal tax schedule is location
specific and tax differences between large and small cities depends on the
level of government spending, the concentration of housing wealth and the
strength of agglomeration economies. Our estimates for the US imply higher
optimal marginal rates in big cities than in small cites. Under the current
Federal Income tax code with progressive taxes, marginal rates are already
higher in big cities which have higher wages, but the optimal difference we
estimate is lower than what is currently observed. Simulating the US economy
under the optimal tax schedule, there are large effects on population mobility:
the fraction of population in the 5 largest cities grows by 7.6% with 3.4% of
the country-wide population moving to bigger cities. The welfare gains however
are smaller. This is due to the fact that much of the output gains are spent on
the increased costs of housing construction in bigger cities. Aggregate goods
consumption goes up by 1.51% while aggregate housing consumption goes down by
1.70%.